This is the Season — For Deals on Luxury Cars

Mercedes-Benz has sold 215,596 vehicles in the first 10 months of 2012, up 12%.

At Mercedes-Benz of Novi in suburban Detroit, cars in the showroom are wearing big blue bows, and sales manager Mike Dega is gearing up for a record two months of holiday-season sales.

“It’s started right now,” Mr. Dega says. “We’ve got a full court push.”

Luxury brands have traditionally used the final weeks of the year to clear out last year’s inventory, while stirring up interest for new models. This year, car buyers can expect more and earlier deals. The competition between makers is particularly fierce as the two leading German brands, Mercedes-Benz and BMW, vie for bragging rights as the No. 1 luxury brand in the U.S. market.

BMW is looking to wrest back the crown it held last year. It has sold nearly 213,000 cars and SUVs year to date, and trails Mercedes by less than 2,800 vehicles.

Both are rolling out aggressive year-end sales “events” well ahead of the traditional Thanksgiving weekend start.

So confident is BMW in its U.S. market that it is diverting more than 5,000 vehicles from slower-selling European and Asian markets—including popular all-wheel-drive 3 series sedans. To move all that metal, the German manufacturer is offering discounts of up to $3,500 or more, with additional discounts aimed at retaining existing customers, dealers say.

Mercedes is countering with similar discounts aimed at keeping customers in the fold, along with deals they hope will prod people to switch from rival brands. Mercedes is also allowing drivers of leased cars to get out of their contracts up to five months early if they agree to take a new vehicle.